The FIFO (First-In, First-Out) method is an inventory valuation technique where the earliest purchased or produced items are the first to be sold or used. This method is crucial in process costing, as it helps to accurately allocate costs to products based on their production timeline, ensuring that older costs are matched with current revenues, which is essential for financial reporting and analysis.
congrats on reading the definition of FIFO Method. now let's actually learn it.